16 Apr 2020
By Stuart Patrick, Chief Executive Glasgow Chamber of Commerce
The Scottish Government’s revision to the Small Business Grant scheme aimed at helping SMEs during the COVID-19 crisis will be welcomed with relief by businesses for whom these grants could be the difference between survival and failure.
Glasgow Chamber had campaigned for this change as previously in Scotland companies had been eligible for one grant only, while elsewhere in the rest of the UK companies could receive a grant for each of their eligible properties.
Finance Secretary Kate Forbes’ announcement that the Small Business Grant would now be awarded at a 75% level for second and subsequent properties is a victory for common sense.
The Chamber had been bombarded with complaints from our members – particularly in the hospitality, leisure and retail sectors - about the different approaches being adopted by the Scottish and UK Governments in deciding eligibility for the £25,000 grants, and the impression that companies who were losing out were all larger firms is wrong.
I would like to thank the Scottish Government for acting on the well-voiced concerns of ourselves and other business organisations on this matter.
What is now vital is that a strict timetable is followed for cash distribution as the need for many businesses is desperately urgent. Ms Forbes said in Parliament that the revisions will be in place by Tuesday 5 May.
But there are still other issues to be resolved around rescue funding, for example the pace at which the Coronavirus Business Loans Scheme is being rolled out. As I write, only 5,000 companies across the UK have received support despite nearly a fifth of companies reporting in a British Chambers of Commerce survey that they have no more than a month’s cash left.
The scheme expects banks to assess whether companies are good and viable businesses and the viability tests appear to be largely the same as banks were using before the crisis began.
Via our links to British Chambers of Commerce we are calling for the Chancellor to agree with the banks how lower viability thresholds can be applied, perhaps by expanding the Government Loan Guarantee from 80% to between 90 and 100%.
Perhaps the least surprising result of the BCC’s most recent survey report was the scale of the take up of the Job Retention Scheme. Almost three quarters of companies said they were planning to use the scheme, with nearly four out of 10 planning to furlough more than 75% of their staff.
That squares with the feedback we are hearing from Glasgow Chamber members and demonstrates the enormous scale of the economic impact this crisis is having.
For those furloughing nearly all staff the pressure on HMRC to get the cash distributed is intense.
These are the companies whose revenues will have all but dried up and are desperately hoping the May deadline for payments can be advanced as far as possible. Cash flows are the most urgent matter and will be for the next three weeks.
Nevertheless the Chamber is also turning its mind to the future and actions we need to consider as we try to move from crisis into recovery. For example, it may be that the Job Retention Scheme will have to run far longer than the Chancellor may originally have intended.
In sectors like hospitality, retail, aviation and tourism the re-emergence of demand may be tentative and stuttering and if the furlough wage support is ended too abruptly job losses may surge.
The Chamber has established a Glasgow Business Resilience Council bringing together many of our most active members to recommend actions for a smooth and swift recovery in business life once an end to the crisis is in sight.
Much damage will have been done to customer confidence, to company balance sheets and to economic assets like our education and transport systems.
But the faster we get cash into bank accounts the more the damage will be limited.
